Aug. 19 (Bloomberg) -- Western Digital Corp. said it
received an antitrust complaint from European Union regulators
over its purchase of Hitachi Ltd.’s storage business.

“The statement of objections sets out the European
Commission’s preliminary assessment regarding the combination”
and “its potential effects on competition,” Western Digital
said in a regulatory filing today. It didn’t give details of the
EU’s complaint.

The commission in May opened in-depth probes into Western
Digital’s transaction as well as Seagate Technology Plc’s
separate plan to buy Samsung Electronics Co.’s computer hard-disk drive operations. Seagate said today that it doesn’t expect
to get a similar warning for its deal, which was formally
notified to EU regulators for clearance a day earlier.

The two transactions would reduce the number of large
manufacturers of mechanical hard-disk drives for computers to
three from five, leaving Western Digital with 50 percent of the
market, Seagate with 40 percent and Toshiba Corp. with around 10
percent, according to researcher IHS Inc.’s iSuppli.

The hard-drive industry “has already experienced
significant consolidation and the proposed acquisitions will
further reduce competition,” Joaquin Almunia, the EU’s
antitrust chief, said when he announced the in-depth probes.

Western Digital retreated 3.3 percent at 12:34 p.m. in New
York trading.

Being first to notify a deal can bolster its chances of
being approved in markets where the number of companies is
relatively small, according to lawyers. That is because each new
deal shrinks the number of competitors in the market.

‘Race to the Door’

“Where there is a potential parallel deal in the same
market, there is a race to the door” for companies to file for
merger approval, said Matthew Hall, a lawyer at McGuire Woods
LLP in Brussels.

In its May statement the commission said it would examine
the Western Digital transaction “taking into account the
Seagate/Samsung transaction which was notified first.”
Seagate’s bid would be reviewed “without regard” to the other
deal.

Companies doing deals in markets with few players need to
be aware that rivals may also be considering mergers that could
affect approvals, said Anne MacGregor, a lawyer with Cadwalader,
Wickersham & Taft LLP in Brussels.

“Thought should be given to other possible deals out there
and their antitrust impact with the European Commission’s ‘first
in, best dressed’ policy in mind,” MacGregor said in an e-mail.

‘Cooperated Completely’

“Seagate believes it has cooperated completely with the
European antitrust regulators and at this time we have not
received and, do not believe we will receive, any statement of
objections in connection with our transaction,” Brian Ziel, a
spokesman for the Irvine, California-based company, said in an
e-mail today.

A spokeswoman for the Brussels-based commission, who
couldn’t be identified in line with official policy, confirmed
that the agency sent the statement of objections to Western
Digital and declined to comment further. Being sent such a
document doesn’t mean that the deal will be blocked.

The Western Digital deal may also harm TDK Corp., the only
independent supplier of heads for disk drives, because the
combined company would buy fewer of them, the EU said in May.

U.S. regulators are also examining both deals. Western
Digital has said it and Hitachi received a second information
request from the Federal Trade Commission in April that extended
the antitrust review of the deal.

Seagate received a second request from the FTC on May 20.
The company said in a filing it was “working cooperatively with
the FTC as it reviews the proposed transaction.”